The European Commission called on Wednesday for big gas and power suppliers to split from their transport networks in the hope of infusing more competition into a sector Brussels considers too staid.
Laying out a sweeping shake-up of the energy industry, the European Union's executive arm said that "tough conditions" were also needed on foreign companies to ensure a level playing field with suppliers from abroad.
If the Commission's eagerly -- and uneasily -- awaited proposals go ahead, the days are numbered for big integrated companies that both produce gas and electricity and then transmit energy to retail distribution networks.
The European Union's executive arm has long lamented what it considers to be a lack of competition in a sector as essential to Europe's economy as providing gas and electricity.
"If a company sells electricity and gas and at the same time owns the network it has every incentive to make sure that its competitors don't get fair access to its grid," Commission chief Jose Manuel Barroso told journalists.
For Brussels, fully integrated energy companies such as EON in Germany and EDF in France inevitably have conflicts of interests because they both produce energy and control the high-pressure pipelines or high-tension power lines that bring energy to house-to-house distribution networks.
Because such companies own the transmission networks, their customers have little choice but to buy gas or electricity from them.
Not only does the situation stifle competition, but it also discourages companies from investing in Europe's ageing energy infrastructure because that might allow rivals to get in on their game, according to the Commission.
In the Commission's view, the best solution is to require gas and electricity companies to hive off their transmission networks from the production business into separate companies to avoid any conflict of interest.
With a number of countries up in arms at the prospect that their big energy groups could be broken up, the European Commission also came up with a slightly less drastic option.
In the second scenario, companies would be allowed to keep legal ownership of their transport networks as long as they are run by an "independent system operator".
To avoid non-EU firms snapping up networks spun off in Europe, the Commission proposed that foreign groups would have to prove that they did not own gas supply or power generating activities.
"To protect the openness of our markets ... we need to place tough conditions on ownership of assets by none European companies to make sure that we all play by the same rules," Barroso said.
(AFP)